Govt prunes SAIL stake sale size

New Delhi, March 20: The government today decided to scale down the SAIL issue size to 5.82 per cent because of poor market conditions.

The stake sale, scheduled for Friday through the offer-for-sale route, will fetch the exchequer about Rs 1,587 crore at Rs 66 per share.

The SAIL scrip today closed at Rs 65.05 on the Bombay Stock Exchange. During the day, the stock had touched a four-year low of Rs 64.05.

Sources said the government truncated its original plan to offload 10.82 per cent in view of the poor valuation of the stock.

The stake sale will be just enough to meet the Centre's revised divestment target of Rs 24,000 crore for this fiscal, the highest realisation from selloffs in a single year.

The offer size has been trimmed because of the opposition from the steel ministry, which argued that the current share price of SAIL did not reflect its true value.

After this, the empowered group of ministers decided to prune the issue size, sources said, adding that rest of the stake sale can happen in the next fiscal.

In April 2010, SAIL had commanded a valuation of Rs 1.58 lakh crore. Today, its market capitalisation stands at a mere Rs 26,869 crore. The scrip has fallen 32 per cent between April 1, 2012 and today.

The SAIL offer will take place through a separate window on both the BSE and the NSE between 9:15am and 3:30pm.

The issue will be the second divestment this month where the government has truncated the offer size fearing adverse market conditions.

Last week, the government had pruned the issue size of Nalco to 5 per cent plus an option to retain an equal number in case of oversubscription.

Finally, it garnered about Rs 628 crore by selling a 6 per cent stake.

The Centre has raised over Rs 22,300 crore so far by selling a part of its stake in state-run companies, including NTPC, NMDC, Nalco and Rashtriya Chemicals and Fertilisers.

The government has already held roadshows in Singapore, Hong Kong, the US, the UK and continental Europe for the SAIL issue.

SBI Caps, Kotak Mahindra and Deutsche Bank have been appointed as the merchant bankers.

Post divestment, the government's stake in the country's largest steel firm will come down to 80 per cent.

For the third quarter ended December, SAIL has posted a 23 per cent fall in net profit at Rs 484 crore because of lower net sales realisation amid subdued market conditions.

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